Jury still out on Food Security Bill

With Parliament abruptly adjourned sine die on Wednesday, the National Food Security Bill (FSB) may have to wait for another session for its passage or the government may take the Ordinance route. The Bill, UPA government’s most ambitious social welfare programme in the run-up to the 2014 General Elections, was tabled in the Lok Sabha on Monday amid uproar by the Opposition.

Nobel laureate and economist Amartya Sen has come out openly in support of the bill. Not only that, he lambasted the opposition for disrupting the proceedings in Parliament.

“There are things on which opposition may have different views. They should debate the issue... rather than disrupting proceedings. In Parliament they are killing arguments. If the Opposition succeeds in bursting Parliamentary debate, they should be held responsible for it,” Sen said at a press conference along with activists on the FSB in New Delhi.

While Sen’s intentions to empower millions of poor in India are commendable, the jury is still out whether the FSB is the right way forward. We took the opportunity to revisit the finer points of both sides in the ongoing debate.

The Bill

Cleared by a Parliamentary committee in January this year, the proposed Bill aims to provide legal right over subsidised food grain to 67 per cent of the population as promised in the ruling party’s manifesto in 2009. The Bill proposed to do away with priority and general classification of beneficiaries and provide uniform allocation of 5 kg of food grains to an individual every month at the rate of Rs 3 per kg of rice, Rs 2 per kg of wheat and Rs 1 per kg of cereals.

Linked to Aadhar (unique identification card scheme), the FSB will cover about 800 million people – 75 per cent of the rural population and 50 per cent of the poor in urban India. This is in addition to the Antodaya Anna Yojana which supplies 35kg food grains per month per family to 2.43 crore poorest of poor families. To meet the requirements of the programme, government will have to procure an estimated 61.23 million tonnes of food grains annually, which is likely to cost the exchequer Rs 1,24,724 crore.

For the Bill

No poulism

A common propaganda that has been raging against the FSB is that it is a populist idea of the UPA to remain in power, which is not the case. True, the Congress-led UPA has included the agenda in its manifesto and tabled the versions of the Bill. The FSB is the result of intense debate and concerns raised and debated over several years in academia, policy circles and civil society groups. Its roots lie in the 2001 civil writ petition filed in the Supreme Court by the People’s Union of Civil Liberties, Rajasthan, demanding that the country’s rotting food grain stocks be used to prevent mass hunger and acute starvation. The petition emphasised the constitutional basis of the “right to food” flowing from Article 21 that guarantees the fundamental right to life.

Targeting Hunger, Malnutrition

The pro-FSB lobby asks: How can the second fastest growing economy in the world have the hunger and malnutrition levels worse than that of Sub-Saharan Africa? We contribute 40% to the world’s overall maternal, neo-natal, infant and child deaths. We have half the world’s undernourished children. Fifty-four per cent of our women suffer from anaemia.

Isn’t it a paradox that India’s decades-long achievement of producing food surpluses and record economic growth has failed to provide even two square meals a day to over 200 million hungry and malnourished people? Isn’t it baffling that the Indian economy registered growth at 6-9 per cent in the last decade while the level of under nutrition among children dropped a mere one percent from 1998-99 to 2006? Chronic hunger and extreme poverty in India’s vast swathes of territory is a ticking time bomb. The problem of Naxalism is partly a reflection of this reality.

A rights-based entitlement

Inflation hurts the poor most and restricts their access to food. So far, government interventions have been in the form of exclusionary welfare schemes and have not been very successful in identifying the poor. On the other hand, the National Food Security Bill has been conceived as a human-rights law meant to protect people’s rights to food. It’s a shift from a welfare-based to a rights-based approach. Also, the argument that it would be better for the government to enhance productivity rather than doling out subsidies at the expense of taxpayers is flawed. India is not a food-deficit nation. The problem is surplus foodgrain doesn’t reach our hungry population. The massive procurement of food grains through an Aadhar linked public distribution system will help eliminate middlemen and profiteers ultimately benefiting the consumers.

Against the Bill

Bad economics

Amid stagnating growth rates and shaky economic recovery, the FSB will put an enormous burden on the exchequer. The Bill is likely to cost the government Rs 1.25 lakh crore each year. Do we have enough resources to finance such a massive programme? Over the period, the cost of procuring food grains and stocking them will also go up thereby expanding the Food Bill. Massive government procurement may further push the prices of rice and wheat in the open market up which will ultimately hurt the common man. A higher minimum support price mechanism for cereals will distort demand and supply in vegetables, fruits and non-cereals creating a vicious cycle of food inflation.

Hunger versus nutrition

Simply providing for the basic minimum food is unlikely to do enough to improve India’s malnutrition levels. Food security alone is not sufficient to ensure nutrition. In fact, the unintended consequence of the FSB will ensure that non-cereal may remain out of reach for the poor.

Blatant populism

The FSB is at the end of the day a subsidy which makes a beggar out of the poor. It is demeaning and lowers the dignity of labour when the reverse should be done. Rather than improving the delivery of the public distribution system, we are creating another avenue for scam in a middlemen led Indian economy. Instead of blatant dole outs, the task should be to create productive assets in the economy along with skills enhancement.

Challenges

The intent of Food Security Bill is indeed pious. India’s true potential cannot be realised unless widespread malnutrition and poverty is removed. But our past experience with grandiose social welfare schemes has hardly been satisfactory. It remains a big question whether the government machinery can deliver on Congress chief Sonia Gandhi’s pet project.

The pessimism isn’t unwarranted. Take for instance, the government’s record on the public distribution system (PDS) has been, if anything, a glaring example of mismanagement and wastage of scarce resources. The PDS along with its minimum support price for cereals has inflated both procurement prices and grain stocks. Despite excess stocks, the price of food grains in the country is soaring while the targeted groups remain neglected. Besides, it has also created bias for grain production which, in turn, has stymied a shift towards protein-rich food products. Instead of relying on a leaky PDS, the government will do well to focus on direct cash transfers. Proper targeting of beneficiaries using the Aadhaar numbers could cut the food subsidy bill by around Rs 40,000 crore.

While plugging the leaks in the PDS is imperative, the government must explain how it is going to finance the Food Security Bill which in the first year alone is going to cost Rs 1,24,747 crore to the exchequer. In fact, the government has not even discussed additional costs needed for administering the program, enhancement of production, investments for storage, movement, processing and other infrastructure.

The Commission for Agricultural Costs and Prices report “National Food Security Bill: Challenges and Options” released in December 2012 suggests the financial total expenditure may go up to Rs 6,82,163 over a three year period. The government must ensure that such a whopping figure must not become a burden on the taxpayers. There is no roadmap for funding the scheme on a sustained basis.

Who does not love a free lunch? When the disbursal is selective (case as of now), demand for universal spread is inevitable. Driven on the populist plank, the implementers might find it difficult not to make it eventually universal thus carrying the potential risk of further ballooning the subsidy burden.